GE Aerospace (NYSE: GE)

GE Aerospace demonstrated strong financial performance in Q1 2025, with double-digit growth in both revenue and profit. The company's operating profit margin expanded by 460 basis points to 23.8%, reflecting improvements in pricing, increased spare parts volume, and operational efficiencies. Adjusted EPS growth of 60% significantly outpaced revenue growth, highlighting the company's ability to translate top-line expansion into improved bottom-line results. These improvements were achieved despite ongoing supply chain constraints and inflationary pressures.

Commercial Engines & Services drove the majority of GE Aerospace's growth, with revenue increasing 14.5% and segment profit surging 35.3% year-over-year. This strong performance was primarily fueled by increased aftermarket activities, including higher spare parts volume and internal shop visits. While commercial engine deliveries decreased due to supply chain constraints, the defense segment showed modest revenue growth of 0.5% but delivered a significant 15.6% increase in profit, reflecting favorable mix and productivity improvements. Both segments expanded their profit margins, underscoring GE Aerospace's effective execution in a challenging operating environment.

GE Aerospace's revenue continues to be dominated by services, which accounted for 63.9% of total revenue in Q1 2025. This service-heavy mix supports margin expansion and cash flow stability, as the aftermarket business tends to generate higher margins than equipment sales. The company's total RPO (Remaining Performance Obligation) grew modestly to $172.6 billion, providing strong visibility into future revenue. Notably, Defense & Propulsion Technologies' RPO increased by 4.8% since December 2024, driven by new orders including a $5 billion IDIQ contract from the U.S. Air Force, while Commercial Engines & Services maintained its substantial $153.8 billion backlog.

GE Aerospace generated $1.54 billion in operating cash flow and $1.44 billion in free cash flow during Q1 2025, representing year-over-year declines of 5.3% and 13.7%, respectively. These decreases were primarily due to working capital growth, higher income tax payments, and payments of employee benefit liabilities. The company maintained a strong liquidity position with $12.41 billion in cash and cash equivalents, despite significantly increasing shareholder returns through $1.91 billion in share repurchases and $302 million in dividend payments. Total borrowings increased slightly to $19.57 billion, reflecting a conservative approach to leverage with credit ratings of A3/A- from Moody's and S&P, respectively.